The U.S. banking industry reaped big profits in 2010 as the financial crisis faded further into the distance.

If all the regulator can do is try to talk them into increasing lending, why should banks listen?

“Well, they don’t need to,” Bair said at the Reuters Future Face of Finance Summit. But banks do listen to regulators, the healthier institutions will be “leading that charge” before others, and it would be a bad idea to try to force lending, she said.

Bair, who is leaving the FDIC in June, says people tend to overestimate the power of a regulator.

“It can be frustrating too. I know I think people assume that we have more power than we do,” she said.

“A lot of the power of the regulator is just through your public pronouncements,” Bair said. “I guess even after I leave I’ll still have the ability to make public pronouncements.”

Bair says she will eventually go into academia or the nonprofit world.